As to taking a loss on their home. That's already happened, staying there vs renting somewhere else has significant direct costs. If a community can survive on it's own then awesome, but subsidies are simply a terrible idea.
True, but right now we are erring so far on the side of preserving the status quo that it's almost a moral axiom that the character of neighborhoods should be preserved forever and people should never be forced to move for financial reasons.
The debates over gentrification are rife with this philosophy. Ultimately it does much more harm than good for all except a lucky grandfathered-in few.
I think the author lead with East Cleveland for a reason. According to Wikipedia [1], East Cleveland contains the nation's first industrial park, historical millionaires' homes, and part of one of the main arteries into the city of Cleveland. Poking around on Google Maps shows that it also contains parts of two large and attractive parks (one attached to a historical cemetery where a US President is buried).
It would be hard to write this area off entirely.
A possible problem might be that a failing area is likely to be undesirable and therefore have low property prices and concomitant taxes. Moving to a more desirable area might be unaffordable. Many people have a strong emotional connection to their home, and would find it difficult to sell it (perhaps at a considerably lower price than they think it is worth) and move somewhere smaller.
Further, there may be people who are "post-economy" in the sense that they have retired. From their point of view, they've paid their dues and have no need to follow the jobs any more. They may have built up local social ties that they don't want to sever by moving.
My point isn't that failing places need to be propped up indefinitely, but that there's a middle ground between "successful, valuable" things and "failing, worthless" things. And there are infrastructure projects (e.g: rural broadband) which can help retain jobs and communities in "failing" places relatively cheaply.